Parts for H. Rept. 114-197

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114th Congress } { Rept. 114-197
HOUSE OF REPRESENTATIVES
1st Session } { Part 2
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WESTERN WATER AND AMERICAN FOOD SECURITY ACT OF 2015
_______
July 14, 2015.--Ordered to be printed
_______
Mr. Bishop of Utah, from the Committee on Natural Resources, submitted
the following
SUPPLEMENTAL REPORT
[To accompany H.R. 2898]
[Including cost estimate of the Congressional Budget Office]
This supplemental report shows the cost estimate of the
Congressional Budget Office with respect to the bill (H.R.
2898), as reported, which was not included in part 1 of the
report submitted by the Committee on Natural Resources on July
13, 2015 (H. Rept. 114-197, pt. 1).
CONGRESSIONAL BUDGET OFFICE ESTIMATE
In compliance with clause 3(c)(3) of rule XIII of the House
of Representatives, the cost estimate prepared by the
Congressional Budget Office and submitted pursuant to section
402 of the Congressional Budget Act of 1974 is as follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 14, 2015.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
U.S. House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2898, the Western
Water and American Food Security Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Aurora
Swanson.
Sincerely,
Keith Hall.
Enclosure.
H.R. 2898--Western Water and American Food Security Act of 2015
Summary: H.R. 2898 would direct the Bureau of Reclamation
(BOR) to convert water service contracts with water districts
in 17 western states to repayment contracts if a contractor
requests it. Water users that choose to convert their contracts
would be required to accelerate repayment of their share of the
capital costs of constructing the affected projects. Under the
bill, existing repayment contractors would have the option to
repay their share of capital costs on an accelerated schedule.
Based on information from the BOR, CBO estimates that
enacting the bill would reduce direct spending by a total of
$883 over the 2016-2025 period. Under the bill, offsetting
receipts, which are treated as reductions in direct spending,
would increase by $721 million over the next 10 years from
accelerated repayments (net of annual payments that would
otherwise occur under current law). H.R. 2898 also would repeal
the authority to implement the San Joaquin River Restoration
Settlement Act (SJRRSA) which CBO estimates would reduce
federal costs by $162 million over the next several years.
Additionally, because the staff of the Joint Committee on
Taxation (JCT) expects nonfederal contractors would finance
accelerated payments with bonds exempt from federal taxation,
they estimate that enacting the legislation would lead to a
decrease in revenues of $89 million over the 2016-2025 period.
In total, CBO estimates that those changes in direct spending
and revenues would decrease budget deficits over that 10-year
period by $794 million. Because the legislation would affect
direct spending and revenues, pay-as-you-go procedures apply.
H.R. 2898 also would allow the BOR, the US Fish and
Wildlife Service (USFWS), and the National Oceanic and
Atmospheric Administration (NOAA) to respond to drought
conditions in western states by authorizing appropriations for
projects to store water and by accelerating reviews of permit
applications and environmental studies for new water projects.
The bill also would decrease amounts authorized to be
appropriated by repealing the SJRRSA. Based on information from
those agencies, and assuming the appropriation of the necessary
amounts, CBO estimates that enacting the bill would increase
discretionary spending by $398 million over the 2016-2020
period and by $784 million over the next ten years.
H.R. 2898 would impose intergovernmental mandates as
defined in the Unfunded Mandates Reform Act (UMRA) by
preempting the ability of the State of California to enforce
its own water management and wildlife preservation laws. The
bill would establish that ensuring the safety of fish required
by state laws would be deemed satisfied by the existence of a
warm water fishery in the San Joaquin River. The bill also
would require two water districts to participate in a program
to reduce non-native fish species in the Stanislaus River.
Based on information from state and local agencies about the
preemption and other requirements, CBO estimates that the
aggregate cost for state and local governments to comply with
those mandates would not exceed the annual threshold
established in UMRA for intergovernmental mandates ($76 million
in 2014, adjusted annually for inflation). The bill contains no
private-sector mandates as defined in UMRA.
Estimated cost to the Federal Government: The estimated
budgetary effect of H.R. 2898 is shown in the following table.
The costs of this legislation fall within budget function 300
(natural resources and environment).
Basis of estimate: For this estimate, CBO assumes that H.R.
2898 will be enacted near the end of fiscal year 2015.
Direct Spending
Net Change in Contract Repayments. Under current law, the
BOR delivers water to users under 860 water service and
repayment contracts in 17 western states. In addition to paying
for the water, those users also pay for a portion of the
estimated capital costs of constructing the reservoirs and
conveyance systems that store and deliver water. In each of the
next several years, those contractors will pay the U.S.
Treasury about $250 million annually for their share of
construction costs (including interest) with an outstanding
obligation of about $5.3 billion.
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By fiscal year, in millions of dollars--
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2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016-2020 2016-2025
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CHANGES IN DIRECT SPENDING
Net Change in Contract Repaymentsa
Estimated Budget Authority............... -186 -388 -440 -188 40 90 89 88 87 87 -1,162 -721
Estimated Outlays........................ -186 -388 -440 -188 40 90 89 88 87 87 -1,162 -721
Repeal the San Joaquin River Restoration
Settlement Act
Estimated Budget Authority............... -10 0 0 0 -152 0 0 0 0 0 -162 -162
Estimated Outlays........................ -4 -7 0 0 -53 99 0 0 0 0 -63 -162
Total Changes
Estimated Budget Authority........... -196 -388 -440 -188 -112 90 89 88 87 87 -1,324 -883
Estimated Outlays.................... -190 -395 -440 -188 -13 -9 89 88 87 87 -1,225 -883
CHANGES IN REVENUES
Estimated Revenuesb.......................... * -2 -5 -9 -11 -12 -12 -12 -12 -12 -27 -89
NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
Effect on Deficit............................ -190 -393 -435 -179 -2 4 101 100 99 99 -1,198 -794
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Construction of Water Storage Projects
Estimated Authorization Level............ 0 0 0 335 25 0 0 0 0 0 360 360
Estimated Outlays........................ 0 0 0 134 77 55 37 29 22 5 211 360
Water Storage at Federal Dams
Estimated Authorization.................. 60 60 60 60 60 60 60 60 60 60 300 600
Level Estimated Outlays.................. 24 36 45 51 56 59 60 60 60 60 212 511
Repeal the San Joaquin River Restoration
Settlement Act
Estimated Authorization Level............ -21 -21 -21 -21 -21 -21 -21 -21 -21 -21 -105 -210
Estimated Outlays........................ -8 -13 -16 -18 -20 -21 -21 -21 -21 -21 -74 -179
Accelerating Project Reviews
Estimated Authorization Level............ 6 6 6 6 5 5 5 5 5 5 29 54
Estimated Outlays........................ 6 6 6 6 5 5 5 5 5 5 26 51
Other Provisions
Estimated Authorization Level............ 10 4 4 4 4 4 4 4 4 24 42
Estimated Outlays........................ 8 4 4 4 4 4 4 4 4 4 24 41
Total Changes
Estimated Authorization Level........ 55 50 48 383 73 47 47 47 48 48 609 846
Estimated Outlays.................... 28 33 39 176 122 102 85 77 70 53 398 784
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Notes: Components may not sum to totals because of rounding. * = less than $500,000.
aCBO estimates that the net loss in offsetting receipts from enacting this provision would total about $540 million over the next 35 years.
bFor revenues, negative numbers indicate a decrease in revenues and thus an increase in the deficit. Estimates prepared by the staff of the Joint
Committee on Taxation.
Generally, contractors receive water under service
contracts until construction of an entire project is complete.
At that time, new contracts are negotiated (known as repayment
contracts) with annual payments adjusted to reflect the final
capital costs. The repayment period under those contracts
cannot exceed 40 years and water users typically cannot pay
their share of construction costs on an accelerated
schedule.\1\
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\1\Agreements between the federal government and water users for
delivering water for irrigation, municipal, and industrial purposes
from federally built projects are generally governed by either water
service contracts or repayment contracts. Water service contracts are
used when construction of a project is still in progress and the final
costs--including water users' share of those costs--are not yet known.
They are also used when a water user does not want a permanent
contract. Repayment contracts are available to water users when final
construction costs and the user's share of those costs are known.
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H.R. 2898 would authorize the BOR to convert any water
service contract to a repayment contract if the contractor
requests it. Amounts due under such a repayment contract would
be based on an estimate of final costs if construction of the
project is not yet complete. Under the bill, users that choose
to convert would be required to repay their share of the
capital investment in the project on an accelerated schedule.
Contractors operating under existing repayment contracts also
would have the option to repay on an accelerated schedule.
Contractors that receive water for irrigation from bureau
projects would make accelerated payments that are lower than
the total payments they would make under current law. They
would pay, either in one lump sum or in equal installments over
three years, the present value of their future contract
payments discounted at one-half of the 20-year maturity rate
for Treasury securities. Municipal and industrial contractors
would prepay their entire outstanding principal balance in a
lump sum.
Based on information from the BOR, CBO expects that about
35 percent of the current contractors would choose to convert
to repayment contracts in the first few years after the bill's
enactment. CBO estimates the increase in receipts from
accelerated payments would total $1.6 billion over the 2016-
2025 period. During the same period there would be a
corresponding loss in regular annual repayments (including
interest from Municipal and Industrial contractors) that would
otherwise occur under current law totaling $874 million. On
balance, under H.R. 2898, CBO estimates that net receipts would
increase by $721 million over the 2016-2025 period. That 10-
year increase in net receipts would be more than offset by a
corresponding reduction in payments that would otherwise occur
in the years after 2025. CBO estimates that the net loss in
offsetting receipts from enacting this provision would total
about $540 million over the next 35 years.
Repeal the San Joaquin River Restoration Settlement Act.
H.R. 2898 would repeal the SJRRSA. Under current law, nearly
all of the Friant water contractors in California's Central
Valley repaid their portion of the estimated capital costs of
constructing the Central Valley Project to the U.S. Treasury in
fiscal year 2011. Information from the BOR indicates that about
$90 million of the receipts from those repayments were made
available immediately for implementing the settlement--of which
$10 million remains unspent--and an estimated $152 million will
become available to the BOR to implement the settlement in
fiscal year 2020. Under the bill, those funds would no longer
be authorized to be spent. Thus, CBO estimates that repealing
SJRRSA would reduce direct spending by $162 million over the
2016-2025 period.
Revenues
Staff of the JCT estimates that some of the accelerated
payments from water districts to the federal government would
be financed with bonds that are exempt from federal taxation
and that issuing those bonds would lead to a revenue loss of
$89 million over the next 10 years.
Spending Subject To Appropriation
Construction of Water Storage Projects. Beginning three
years after enactment, H.R. 2898 would authorize the
appropriation of 50 percent of the accelerated payments
received from water contractors (net of annual payments that
would otherwise occur under current law) for new water storage
projects. Based on the repayments estimated to be received
under the bill, the authorization level would total $360
million over the 2019-2020 period. According to the BOR, there
are at least four water storage projects that would be ready to
move forward by 2019--two in the Yakima River Basin in the
State of Washington, Temperance Flat, and the Enlargement of
Shasta Dam in California. Based on information from the BOR,
and assuming appropriation of the authorized amounts, CBO
estimates that implementing those provisions would cost $211
million over the 2016-2020 period. H.R. 2898 would require the
nonfederal sponsors of those new projects to repay 100 percent
of the projects' costs within 40 years. CBO expects that those
repayments would begin after 2025 because of the amount of time
required to construct the new projects. Funds received from
such repayments would be available, subject to appropriation,
for constructing additional new water projects.
Water Storage at Federal Dams. Title X of the bill would
authorize the BOR to develop additional storage capacity at
federal dams if such projects are feasible and consistent with
dam safety and other authorized purposes. The local sponsors
would not be required to contribute to the cost of those
projects prior to constructing them, but some of the
construction costs would be required to be paid within 50 years
after the project is substantially complete. Based on
information from the BOR, seven projects to construct new or
supplemental water storage features would be eligible to be
funded under this provision of the bill. The largest project
would be located at Scoggins Dam in Oregon and would cost $450
million to raise the dam's height and increase storage
capacity. The costs to construct the other six projects would
range between $7 million and $40 million each. The estimated
cost to complete all seven projects would total about $600
million. Assuming the appropriation of necessary amounts, CBO
estimates that spending on those projects over the 2016-2020
period would total $212 million.
Repeal the San Joaquin River Restoration Settlement Act.
The SJRRSA authorized the appropriation of up to $300 million
to implement the settlement; since 2009 when the settlement was
enacted, $90 million has been appropriated. Repealing the
SJRRSA would decrease amounts authorized to be appropriated by
$210 million. If the BOR were to receive additional
appropriations, current law requires that those funds must be
expended only to the extent that nonfederal sponsors contribute
payments or in-kind contributions of equal value. Whether the
Congress will appropriate the remaining $210 million to
implement the Settlement under current law in the next several
years and whether non-Federal partners will match such amounts
is uncertain. Assuming the BOR will receive appropriations of
the amounts specifically authorized over the next 10 years, CBO
estimates that the repeal of the settlement under the bill
would reduce discretionary spending by $74 million over the
2016-2020 period.
Accelerating Project Reviews. With the aim of accelerating
the evaluation of new projects for storing water, recycling and
reusing wastewater, and increasing water supplies in rural
areas, H.R. 2898 would establish the BOR as the lead federal
agency to coordinate with states, other federal agencies, and
the public to:
Expedite environmental reviews and
evaluations of permit applications;
Facilitate early detection and resolution of
environmental issues; and
Construct a publicly accessible database
that would include a list of requirements for each
study and information on the progress toward completing
each requirement.
H.R. 2898 also would require the BOR to identify water
projects constructed across the United States that were
excluded from environmental reviews because they were
determined to have no significant effect on the environment.
The agency would be tasked with developing guidelines for new
exclusions based on the characteristics of those previous
projects.
H.R. 2898 would limit the BOR to spending $3 million or
less on studies conducted as part of its reviews; those studies
would have to be completed within three years. If a study could
not be completed within that period for $3 million or less, the
BOR would be required to provide written notice to the Congress
and any other agencies involved. Finally, the bill would direct
the BOR to annually solicit through the Federal Register
proposals from nonfederal entities to build water projects and
to report to the Congress on the preliminary costs and benefits
of each of those proposals.
Based on information from the BOR and other federal
agencies, CBO estimates that the additional activities required
to implement those provisions would cost about $26 million over
the 2016-2020 period, assuming appropriation of necessary
amounts, for additional staff to coordinate agency reviews,
consolidate project data and documentation, and for regional
directors of BOR to conduct reviews.
Other Provisions. Based on information from the BOR, the
USFWS and NOAA, and on historical spending patterns of similar
programs, CBO estimates that implementing several other
provisions of the bill would cost $24 million over the 2016-
2020 period.
Delta Smelt Management. H.R. 2898 would
require the USFWS to study the population, location,
and habitats of the Delta Smelt in the Sacramento-San
Joaquin Delta. Based on information provided by the
USFWS, CBO estimates that carrying out sampling and
monitoring activities necessary to complete the study
would cost $3 million in 2016, assuming appropriation
of the necessary amounts.
Salmonid Management. The bill also would
require NOAA and the BOR to annually reexamine how
those agencies manage water supplies and to gather data
on the long-term survival of salmonid species in
central California. Based on information provided by
the affected agencies, CBO estimates that conducting
those annual reviews would cost $2 million a year,
assuming appropriation of the necessary amounts. Those
amounts would be used to pay for staff to continually
update models used to inform policies related to
managing water supplies in the affected area.
Drought Response. With an aim to maximize
water deliveries for non-habitat water uses, during
periods when water supplies fall below certain
specified levels, H.R. 2898 would require the BOR and
other federal agencies to approve permits to erect
temporary gates or operable gates on channels in the
Sacramento-San Joaquin Delta and for certain types of
water transfers within 30 days. Based on information
from the BOR, and assuming appropriation of the
necessary amounts CBO estimates implementing those
provisions would cost $2 million over the 2016-2020
period.
Miscellaneous. Other costs under H.R. 2898
would stem from provisions that would direct the BOR to
establish an oversight board to make recommendations
each year for the use of federal funds in the Central
Valley Project Restoration Fund, for staff to carry out
studies to identify opportunities to protect water
resources in coordination with nonfederal partners and
to negotiate conversion of water contracts to repayment
contracts and manage the receipt of accelerated
repayments permitted under the bill. Assuming
appropriation of the necessary amounts and based on
information from BOR, CBO estimates that those
provisions would cost $8 million over the 2016-2020
period.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table.
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By fiscal year, in millions of dollars--
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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015-2020 2015-2025
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NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact. 0 -190 -393 -435 -179 -2 4 101 100 99 99 -1,198 -794
Memorandum:
Changes in Outlays......... 0 -190 -395 -440 -188 -13 -9 89 88 87 87 -1,225 -883
Changes in Revenues........ 0 0 -2 -5 -9 -11 -12 -12 -12 -12 -12 -27 -89
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Estimated impact on state, local, and tribal governments:
H.R. 2898 would impose intergovernmental mandates as defined in
UMRA. The bill would preempt the ability of the State of
California to enforce its own water management and wildlife
preservation laws by establishing that the safety of fish
required by those laws would be deemed satisfied by the
existence of a warm water fishery in the San Joaquin River. The
bill also would require two water districts to participate in a
program to reduce non-native fish species in the Stanislaus
River. Based on information from state and local agencies about
the preemption and other requirements, CBO estimates that the
aggregate cost for state and local governments to comply with
those mandates would not exceed the annual threshold
established in UMRA for intergovernmental mandates ($76 million
in 2014, adjusted annually for inflation).
Estimated impact on the private sector: H.R. 2898 contains
no private-sector mandates as defined in UMRA.
Estimate prepared by: Federal costs: Aurora Swanson and
Jeff LaFave; Revenues: Staff of the Joint Committee on
Taxation; Impact on State, Local, and Tribal Governments: Jon
Sperl; Impact on the Private Sector: Amy Petz.
Estimate approved by: Theresa Gullo, Director for Budget
Analysis.
[all]